BUSINESS STRATEGY MM 5012

Case Analysis
OASIS HONG KONG AIRLINES : THE FIRST LONG-HAUL, LOW COST AIRLINER IN ASIA
Elinda Febriana 29111017 Kenny 29111032 Ditya Rizky Yudistira 29111060 Aditya Dewi Kartika 29111136 A R Sofyandi S 29111144

PROGRAM STUDI MANAJEMEN BISNIS ADMINISTRASI SEKOLAH BISNIS DAN MANAJEMEN INSTITUT TEKNOLOGI BANDUNG 2012

The First Long-Haul, Low-Cost Airliner in Asia Synopsis Oasis Hong Kong Airlines was founded by Stephen Miller the ex CEO Dragonair. He is using the principal investment form property developer, Raymond Lee and Pricilla. Oasis is positioning itself as the only long-haul, low-fare airline operating out of Hong Kong. The Lees become the majority of seed funding, and Allan Wong, the chairman and CEO of VTech Holding, and Richard K.Lee, founder of Trinity Textiles, as the additional player to additional investment in Oasis. Oasis offered two classes of service, which are economy and business-class passengers. It only sold one-way tickets which on the Hong Kong London route which sell for low as HK$1.000 (US$128) for an economy class seat, and HK$6.600 (US$ 846) for a business class seat, excluding axes and surcharges. The Oasis also had relatively simple, easily understood fare structure, which the customer expected customers would find appealing.
Flexi Fare Advance Purchase Fare Value Fare Hot Deal
Available year round Reservation held 72 hours before payment Unlimited free changes to flight and date Changes to passanger name allowed on payment of change penalty and fare difference Refundable subject to cancellation penalty Booked 45, 21, or 14 days in advance Payment must be made at time of flight confirmation Changes to flight, date, and passanger name allowed with penalty and fare difference Refundable subject to cancellation penalty Semi-flexible fare available year-round Payment must be made at time of flight confirmation Changes to flight, date, and passanger name allowed with penalty and fare difference Refundable subject to cancellation penalty Discount value fare Payment must be made at time of flight confirmation Changes to flight, date, and passanger name allowed with penalty and fare difference Non-refundable

Operating long-haul flight would allow the airline to have high average aircraft utilization and efficiency. Oasis could achieve average aircraft utilization in excess of 15 hours per day, and would give a low operating unit cost on a per available seat kilometer basis. Oasis has two airplanes, Boeing 747-400, which can carry 81 business-class seats and 278 economy-class seats. All passengers in economy class would be offered standard complimentary hot meal. For business-class passengers, Oasis would offer standard upgraded meals with complimentary drink.

Oasis adopted the traditional carriers model and relied on brick-and-mortar travel agents to sell ticket. Passengers would also be able to buy tickets directly on the companys website or through a call center.

Problem Identification What is the business strategy of Oasis Hong Kong Airlines to position as the only long-haul and low cost airline operating out of Hong Kong?

Analysis Using PETS analysis as the external analysis:

deregulation of blue sky policy

Economics
influence by oil price that effect on the ticket price, plane price, and price thar related to the airport

advance technology in aviation industry which mean a lot of big plane and can take long-haul

Social
make people easy can travel changes of life style

Politics

Technology

For internal analysis :

5 Forces of Analysis Threat of New Entrance Bargaining power of suppliers Bargaining power of buyers Threat of substitute product Rivalry among competing firms High The regulation make the airline easy to enter the market, the market really attracting investor to invest which mean in airline theres need a lot of capital Rivalry Threat of There are only two supplier for commercial among new competing entrants plane which is Airbuss and Boeing firms There are a lot of competitor that can Threat of Bargaining power of subsitute adjust with the budget of the buyers suppliers product There are only land and sea transportation Bargaining power of which takes a long time to reach the destination buyers There are a lot of competitor and sweep to all customer in all segment

High High Low High

 SWOT Analysis for Oasis Hong Kong Airline: Strength

The capital support by the big investor The CEO has ability to run the company Offering a low price compare to the competitor Give a full service

Weekness
Have a little fleet The fleet was a formar not buy new aircraft because have to wait

Opportunity
no one offers long-houl with cheap price

Threat
Competition between airline that serve long-haul flight

Business Strategy Analysis To examine the business-level strategy, first, must know the customer, because the customers are the foundation of successful business-level strategy and should never be taken for granted. To determine the customers,

Who: a customer from Hong Kong that want to travel long-haul with low price. What: offering long-haul flight with low price using big airplane (Boeing 747-400) How: using OASIS Airline Activity System that consist of high aircraft utilization, using boeing 747-400, using secondary airports, standard service, low fare, long-haul, using website sell ticket, low maintenance cost, and low-fare types. Analysis the core competencies: Four Criteria of Sustainable Competitive Advantage

Capabilities

Resources

Tangible Resources Big airplane Boeing 747 -400

Operational Having 2 Boeing 747-400 for longhaul flight Has objective to London and Vancouver Give full service with low price Management Information System accosiated with the easily understood fare structure

Intangible Resources Innovation on service

Core Competency :
Operational

Is it Valuable?

Is it Rare?

Is it Costly to Imitate? Yes

Yes

No

Is it Competitive NonConsequenc substitu es table? Yes Temporary Competitive Advantage

Performance Implication

Averagereturns to above-average returns

Value Chain Analysis

Primary Activities Operation = Service Support Activities Firm Infrastructure = plane

Strategic Competitiveness : o Low Cost Long Haul with full service Business Level Strategy: COMPETITIVE ADVANTAGE COST UNIQUENESS

BROAD TARGET

Cost Leadership

Differentiation

COMPETITIVE SCOPE NARROW TARGET

Integrated Cost Leadership/ Differentiation Focused Cost Leadership Focused Differentiation

The Oasis Hong Kong business-level strategy is Focused Cost Leadership Strategy. The cost leadership strategy is an integrated set of actions taken to produce goods or service with features that are acceptable to customers at the lowest cost, relative to that of competitors. From tickets for business class and economic class, Oasis Economic Class Business Class HK$ 1,000 HK$ 6,600 Cathay Pasific HK$ 5,880 9,550 HK$ 44,952 British Airways HK$ 2,250 4,525 HK$ 21,350 Virgin Atlantic HK$ 5,532 17,263 HK$ 44,897 46,813

The focus strategy is an integrated set of actions taken to produce goods or service that serve the needs of a particular competitive segment. Oasis

focused only for customers who want to travel long

distance especially from Hong Kong to London or Hong Kong to Vancouver using airplane. In the long run, the route will open in America, Italy, Germany, but it using the secondary airports. It will save on costs especially the airport landing and parking fees. Oasis also gives full service with low price.

Conclusion and Recommendation The Oasis Hong Kong Airline using focused cost leadership business strategy to be the only long-haul and low cost full service airlines. Oasis using focus cost leadership business strategy because it only focused to consumer who wants to have long-haul travel using airplane, especially to Hong Kong London with low price but full service. This strategy is supported by its competitive advantages which own by the company, and the core competition is the operational activities.

Lesson Learned Every company must choose their business strategy based on the core competencies and competitive advantage that owns by the company, so it will help the company to reach above average return.